An Analysis of The Indian Context Through the Srikrishna Committee Report of 2018
April 6, 2019
In the ever-dynamic milieu of dispute resolution in the legal realm, especially in the corporate context, it may be observed that institutions of arbitration and mediation have significantly risen to prominence and are being increasingly preferred as a means dispute resolution over conventional litigation. Circumventing costs accredited to excessivebureaucracy, avoiding delays due to hostile litigiousness, the prevalence of a simplified, flexible and efficient procedure, in addition with the protection of privacy and confidentiality are attributed to arbitration and mediation becoming a mainstay in resolving legal disputes.[1]
Amongst the aforementioned causal factors culminating in the increasing preference of arbitration over litigation as a means of dispute resolution is the implicit promise or assumption of confidentiality in arbitral proceedings. This paper shall delve into the nature of this ‘confidentiality’ and its’ jurisprudential development internationally with the passage of time. The author shall also seek to analyse the recent amendments to the Arbitration and Conciliation Act[2] proposed by the committee constituted under Retd. Justice B.N. Srikrishna (hereinafter, the Srikrishna committee report).[3]
The terms – ‘privacy’ and ‘confidentiality’ – are often associated with the other as inextricably linked with the fundamental character and objectives of the arbitral process,[4] or rather straightforwardly put – “the two sides of the same coin”.[5] Yet, it is imperative to address at the very outset the erroneous usage of the terms interchangeably by acknowledging the difference between them before delving deeper into the issue. The former pertains to the privilege of the arbitrating parties to stipulate that said proceedings be conducted behind closed doors – without the interference or involvement of any third parties. ‘Confidentiality’, on the other hand, ensures an obligation upon the parties, the arbitrator and others involved in the adjudicatory process not to disclose any form of information gathered from the proceedings. Furthermore, while ‘privacy’ is considered to be tacit to arbitral proceedings, certain adjudicatory authorities and jurists have reservations against the treatment of ‘confidentiality’ in a manner congruent to the former, citing transparency and establishment of precedent.
Proponents advocating for confidentiality in arbitration cite judgements maintaining that arbitration is a private procedure with a confidential character[6] and that the very nature of arbitration is to ensure the highest degree of confidentiality over private disputes.[7] It was held in Tournier v. National Provincial Bank that the disclosure of protected documents in arbitral proceedings would be “almost equivalent to opening the door of the arbitration room to third parties.”[8] The English Court of Appeals in the landmark Dolling-Baker v. Merrett case substantiated that there existed an ‘implied duty of confidentiality’ in court proceedings.[9] Russel himself asserted that “while one may assume that confidentiality is a contractual creation and thus the breach of confidentiality should be treated as any other breach of contract.”[10]
With regard to Arbitral Institutions, a significant majority of them acknowledge the need for arbitral proceedings to be conducted privately. For instance, Article 26(3) of the ICC Rules of Arbitration of 2017,[11] Article 28.3 of the UNCITRAL Arbitration Rules of 2010,[12] Rule 39 of the Singapore International Arbitration Council Rules[13] all have provisions facilitating for proceedings in privacy unless parties themselves stipulate against it in the agreement. Notwithstanding the glaring lack of provisions pertaining to confidentiality in domestic legislations, Article 24(2) of the Spanish Arbitration Act of 2003[14] and Section 14 of the New Zealand Arbitration Act of 1996[15]stipulate explicitly the obligation to ensure confidentiality.
There however exist certain aberrations from and exceptions to the absoluteness of the confidentiality principle. In Hassneh Insurance Co. of Israel v. Mew (hereinafter, Hassneh Insurance) the English Court of Appeal deemed that the publication of the arbitral award lay beyond the ambit of the duty of confidentiality, which they opined that was applicable only to the documents (transcripts, witness statements, pleadings and documents disclosed in the arbitration), in as much as to establish a binding precedent.[16] More recently in Ali Shipping Corporation v Shipyard Trogir (hereinafter, Ali Shipping), whilst acknowledging the duty of confidentiality as “implied”, the English Court of Appeal elucidated certain exceptions to the confidentiality principle – the consent of the parties to disclosure, where the Court deems such disclosure of documents or other evidence as necessary in order to protect the legitimate interests of the party to arbitration and interests of justice.[17] This is duly reflected in the London Court of International Arbitration (LCIA) Rules of 2014 which stipulates the exceptions of requirement by a legal duty, the enforcement of the award and the exercise of a legal right whilst acknowledging the applicability of the general principle of confidentiality.[18]
While the cases of Hassneh Insurance[19] and Ali Shipping[20] appreciate the need of striking an equilibrium of sorts, bearing in mind arguments from both sides, certain adjudicatory authorities and jurists have in more recent time increasingly averred from the conventional positional to contend that the confidentiality rule is not ‘absolute’ or ‘implicit’ and has significant exceptions.[21] A United States District Court in Delaware had held that unless explicitly agreed upon by the parties prior to the proceedings, there would be no ‘implicit confidentiality’ in arbitral proceedings.[22] This was reaffirmed in the landmark case of Esso Australia Resources Ltd v. Plowman wherein the High Court of Australia accepted that confidentiality is not ‘an essential attribute of arbitration’ and opined that witnesses were at liberty to disclose anything that might have come to their knowledge by virtue of being privy to the proceedings.[23]The Queen’s Bench in England has allowed arbitrators to publish awards without anonymity on grounds of overwhelming ‘interest of justice’.[24]
Additionally, it has also been suggested by commentators that confidentiality with respect to information shared with the parent company ought to be relaxed and that the observance of confidentiality in contracts should be relaxed in instances where the corporation in question is a public company – which by virtue of its’ nature is duly obligated to convey information to its’ shareholders and the public at large.[25] Furthermore, the famous Australian case of Cockatoo Dockyard whilst appreciating the need for a high level of confidentiality in arbitral proceedings, concluded that privacy does not take precedence over disclosure when ‘public interest’ is concerned.[26] The concern for public interest – and for the public’s ‘right to know’ – has led to the erosion of the orthodox confidentiality principle in arbitral proceedings.[27]
Juxtaposing the international approaches and jurisprudence on the confidentiality in arbitration with that of the Indian legal scenario – which more often than not – looks west for inspiration whilst developing its’ statutory framework, it must be noted that the Indian framework was lacking of provisions that explicitly dealt with confidentiality in arbitration and inevitably relied on the precedence established in common law jurisdictions. Notwithstanding the inadequacy of statutory provisions, it is fair to state that there was an inadvertent lack of cases pertaining to a similar subject-matter that tested the waters of confidentiality or its’ breach in the Indian domain during this time.
The current statutory framework viz. the Arbitration and Conciliation Act of 1996,[28] is devoid of a provision that explicitly addresses the confidentiality in arbitration. The only referrals to the provision might be found in under Section 34, sub-clause (2)(b)(ii) which elucidates that setting aside of an arbitral award is permissible if said award in in conflict with the public policy of India,[29] the requirements for which might only be found in the non-obstante clause under Section 75 pertaining to confidentiality in conciliations.[30] The general assumption by the Courts and jurists alike has been to extend the ‘requirement of confidentiality’ stipulated under Section 75 to apply to arbitral proceedings under Section 34(2)(b)(ii) mutatis mutandis.[31]
Ergo, in an attempt to bridge any gaps pertaining to confidentiality that might amount to confusions and acknowledging the increasing relevance of the concept, making it imperative that it be addressed in their domestic arbitration legislation – India formed a committee headed by Justice (Retd.) B.N. Srikrishna which proposed the Arbitration and Conciliation (Amendment) Bill, 2018.[32] The Srikrishna Committee’s mandate extended to the strengthening and improvement in efficiency of the arbitral institutions, in lieu of their meteoric rise in demand considering the pendency of cases in the Courts and to keep pace (or play catch-up) with the arbitral institutions and practices that have been institutionalised internationally. The bill has already been passed in part in the Lok Sabha (Indian equivalent of the House of Commons) on August 10, 2018 and is now pending before the Rajya Sabha (Indian equivalent of the House of Lords) and is in force as an ordinance.
The Srikrishna Committee proposed that the Bill include a non-derogable provision viz. Section 42A which safeguards confidentiality in arbitration by necessitating that the appointed arbitrator, the arbitral forum and all parties involved all must adhere to the confidentiality principle, with the exceptions of ‘disclosure by a legal duty’ or in ‘protection or enforcement of a legal right’ and ‘enforcement or challenge of an award before any adjudicatory authority.’
Notwithstanding the efforts of the Srikrishna Committee in drafting the Bill, it might be argued that the Bill despite making certain inroads towards tackling the confidentiality issue, is indeterminate and ambiguous with regard to certain issues. For instance, ‘enforcement and protection’ pertains to a limited number of situations that might accrue which warrant the disclosure of the confidential information. Statutory requirements viz. regulation under the regulations of the Securities and Exchanges Board of India (SEBI) or other financial reports and appeals against interim reliefs plead before Courts are certain circumstances which reasonably warrant the disclosure of the information bound under the confidentiality clause. The provision is also analytically opaque with regard to protection of third-party legal rights viz. disclosures deemed necessary to substantiate Res Judicata pleas.
Furthermore, despite the committee propounding to have made their assertions warranting an express provision for confidentiality based on divergent views, it fails to address certain nuances concomitant with the confidentiality obligation. Furthermore, the Australian jurisdiction which since Esso Australia Resources v. Plowman[33] has maintained a contrarian position has been overlooked by the committee which it fails to address in the report. Additionally, the Committee failed to make best of the opportunity of vesting discretionary powers to a certain extent in the arbitral institution, making it more congruent with rules adhered to amongst other international arbitral rules such as the SIAC Rules[34] or LCIA Rules.
Thus, it might be concluded that the Srikrishna Committee despite making inroads into developing an express section governing confidentiality, has made findings lacking off what might be termed as a harmonious and inclusive understanding of the principle. Moreover, in drafting for a blanket application of confidentiality over the parties, the Committee has failed to delve further into the aforementioned exceptions or lucidly explain their applicability – which might be the cause of problems in the foreseeable future.
[1] Hensler, Deborah R. “Court-Ordered Arbitration: An Alternative View”, University of Chicago Legal Forum: Vol. 1990: Issue. 1, Article 12, Accessed from <http://chicagounbound.uchicago.edu/uclf/vol1990/iss1/12> on 5 April 2019.
[2] The Arbitration and Conciliation Act of 1996.
[3] Arbitration and Conciliation (Amendment) Bill, 2018
[4] Gary B. Born, ‘International Arbitration’, Kluwer Law International (2009), 2282.
[5] Esso v. Plowman, [1995] HCA 19.
[6] True North Inc. et société FCB International, Rev. Arb. 2003, 189. Tribunal de Commerce de Paris (Ord. réf.) 22 février 1999, <http://www.kluwerarbitration.com/document/kli-ka-1129007- n?q=%22confidentiality%20of%20arbitration%22>.
[7] G. Aïta v. A. Ojjeh , Cour d’Appel de Paris (1re Ch. suppl.), 18 février 1986, 583.
[8] Tournier v. National Provincial Bank and Union Bank of England, Court of Appeal of England (1924) 1 KB 461.
[9] Dolling Baker v. Merrett (1991) 2 All ER 890.
[10] David St John Sutton, Judith Gill and Mathew Gearing, Russell on Arbitration (23rd edition, South Asian edition, Sweet and Maxwell 2007) 801.
[11]Article 26(3) of the ICC Rules of Arbitration of 2017.
[12] Article 28.3 of the UNCITRAL Arbitration Rules of 2010.
[13] Rule 39 of the Singapore International Arbitration Council (SIAC) Rules.
[14] Article 24(2) of the Spanish Arbitration Act of 2003
[15] Section 14 of the New Zealand Arbitration Act of 1996
[16] Hassneh Insurance Co. of Israel v. Mew [1993] 2 Lloyd’s Rep 243.
[17] Ali Shipping Corporation v Shipyard Trogir (1997) EWCA Civ 3054.
[18] Article 19.4 of the London Court of International Arbitration (LCIA) Rules 2014.
[19] Hassneh Insurance Co. of Israel v. Mew [1993] 2 Lloyd’s Rep 243.
[20] Ali Shipping Corporation v Shipyard Trogir (1997) EWCA Civ 3054.
[21] Bulgarian Foreign Trade Bank v. AI Trade Finance Inc, Case No. T 1881-99 (Swedish Sup. Ct. 27 Oct, 2000).
[22] United States v. Panhandle Eastern Corp, 681 F. Supp. 229 (D. Del. 1988).
[23] Esso Australia Resources v Plowman (1995) 183 CLR 10.
[24] Symbion Power LLC v Venco Imtiaz Construction Company [2017] EWHC 348 (TCC).
[25] Jonas von Goeler, Third-Party Funding in International Arbitration and its Impact on Procedure, (Wolters Kluwer, Vol. 35, 2016) 293 – 330.
[26] Commonwealth of Australia v. Cockatoo Dockyard Pty Limited (2007) HCA Trans 150.
[27] Nigel Blackaby and Constantine Partasides, Redfern and Hunter on International Arbitration (Student Edition, Oxford 2009) 141.
[28] The Arbitration and Conciliation Act of India, 1996.
[29] Section 34(2)(b)(ii) of the Arbitration and Conciliation Act of India, 1996.
[30] Section 75 of the Arbitration and Conciliation Act of India, 1996.
[31] Indu Malhotra, OP Malhotra’s The Law & Practice of Arbitration & Conciliation, (3rd ed., Thomson Reuters 2014) 1880.
[32] Arbitration and Conciliation (Amendment) Bill, 2018.[32]
[33] Esso Australia Resources v Plowman (1995) 183 CLR 10.
[34] Rule 39 of the Singapore International Arbitration Council (SIAC) Rules.
Bhrigu A. Pamidighantam 
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